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Tuesday, 16 March 2010

Meltdown Mondays are just a fond but distant memory

Well, it really did seem as though the expected interim top was in and that the correction was starting on Monday morning. My ES channel broke downwards overnight and it seemed we were away.

I wasn't too happy from an indicators perspective, as I had expected a bullish Monday, and Mondays have almost all been bullish in recent months. In the afternoon after the decline stalled I ran a line parallel to the channel up from the 1085 low and it fit very well where we had retraced to on Monday morning.

Looking at it now, it seems clear that the larger channel is the correct one, so here is the updated ES channel, which has most definitely not yet been broken:

One of the indicators that I have been looking at carefully is the bullish percent index $BPNYA. That made some progress today and is near, or possibly even at, a level which should signal an important interim top:

I was surprised to see USD push up sharply from Friday's close. I had found an in-channel H&S pattern on USD indicating to the bottom of the USD rising channel, and have found those very reliable in the past. However it does seem to have turned back up with some conviction now:

There is some good reason to think that USD may have turned back up now. EURUSD broke through its channel late last week, but that may just have been an overthrow, it has returned today and may now start another wave down:

Gold and oil seem to have made interim tops already, which is a good indicator that we may well see an interim top made soon. Oil has broken out of its rising wedge and is making good progress down towards the wedge target in the 72 area:

Gold has also broken out of its rising wedge, but presents a more intriguing picture as over a longer timeframe we may have a large head and shoulder top on gold indicating to the 950 area, which is something to think about.

It may not play out, there was a more recent IHS on gold that didn't play out, but H&S patterns on gold form often and generally play out. There are three smaller ones within the large H&S pattern that all played out:

I think that we're very close to an important interim top now, and I'm fairly certain we'll see that this week.It is obviously quadruple witching opex this week though, so we can expect some more surprises on the way.

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